IN this week’s column I have decided to look at a business risk from a layman point of view.
A friend of mine asked me if I could partner with him in a business deal in which he is expected to cash in on quick profits.
He is expected to travel to South Africa to order more than 1,000 T-Shirts and all what he was asking from me to do is,  to finance the branding of the T-Shirts in preperation for the Kuomboka Ceremony.
He had assured me that for the past four years he had never failed to sell those T-Shirts each time the ceremony took place.
However I asked him the question; Suppose those T-Shirts do not sale what happens?
He just insisted that they were going to sell.
In any business it is important to look at the negative aspect of it in order to survive the shocks that could accompany the business failure that which, in the first place is not thought off and this is referred to as a business risk.
In a big well run organisation, there is a deliberate position for risk managers just in order to look at the negative aspect of the business and to put in place the shocks which can absorb the business risks that a business can find its self in, unexpectendly.
Small and medium enterprises (SMEs) have a tendancy of painting a good business out look in which  the castles are built in the air and visualises how succesfull their businesses will turn out to be over a  period of time until they stumble on the big business obstacle which in turn,  puts them off the business line.
I remember at one time when I  worked for a firm which had good business prospects and the employees enjoyed the working atmosphere and everything was just going on well.
We developed a very good business plan in which we proposed to bring in a very big  printing machine.
Our financial focus  was excellent and looking at the business plan we could see a very bright  future for the company at the end of the tunnel.
Upon presentation of the business plan to the bank, the credit department could not  resist the approval  of the capital lease finance for the machine.
However the bank also requested for a collateral from us.
The machine was procured fromn the  United Kingdom and because of the overwhelming confidence and the good expectations,  no risk appraisals where looked at.
When the machine landed in the country, it also demanded its own space in form of land and the permanent expectation was to find where to mount it and this called for a place to rent.
Because no consideraton was put forward about the state of the machine and no independent mechanical report was engaged from the experts, the machine was brought in and gave a number of challenges in the operation aspect and worse still,  it registered a number of faullts which required attenton.
As the core business outlook was printing, it was discovered that the peferct execution of the business was affected and coupled with business economic crunch which affected the world in 2008, the business drastically went down and this resullted in the reduction of the work force and consquently the loan repayment was equally affected.
Today in this column I want SMEs to take business risk as an intergral part of the business operations.
Let the business form the business questions that would look at business risks for them to mitigate shocks that come about because of the cicumstances that can not be seen.
If this  happens   what can we do to mitigate the effects?
Business risks introduces the aspect of insurance in the business.
Today when risks are anticipated in the running of a business,  the place to run to is the insurance company.
Today insurance companies offers a range of insurance products such as:-
•Loss of business.
•Fire to properties.
•Theft against company assets.
•Accidents.
•Insurance against third parties in terms of accidents
And many other related incidences that would call in insurance.
It is therefore, important to know that running of small businesses equally goes through  ups  and downs and equally requires the business owners to look on both sides of the coin when it comes to making business decisions.
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